Investigations have been carried out on the precision of target location in digital images to determine the influence of spatial and intensity quantization and threshold levels. Circular targets and centroiding methods are used in the study, and deviations from ideal images of the targets cause considerable loss of precision. Under favorable conditions, the precision of location was found to be better than 0.02 pixel size in both the x and y directions. The precision varies with several hundred percent according to the choice of the quantization parameters.